Avoid Losing Your R&D Tax Claim: Key Deadline Approaching
We’re delighted to share insight on how your FinTech organisation can navigate changes to R&D tax relief legislations, with insights shared by our partners, one of the UK’s fastest growing mid-tier business advisory firms, Sedulo.
Legislative and policing changes are shaking up the R&D tax incentives landscape. The changes are impacting thousands of companies across the UK in different ways and at different times – don’t assume it’s business as usual.
The FinTech landscape is ever changing. The sector needs to be nimble, to adapt and evolve. The sector is one which attracts vast investment, from start up to corporate, companies invest into the technology, usability and security of financial data.
This investment can often be considered as a part of a company’s R&D tax claim where the financial benefit can be significant (from 9% to 33% of expenditure). The R&D tax incentives regime has been a keystone of the Government’s innovation strategy for decades but over recent years inadequate policing by HMRC led to significant levels of error and fraud.
The error and fraud are estimated to have cost over £1.3Bn in taxpayer’s money for the financial year 2022. Reform was required which saw a raft of changes to protect the integrity of the scheme, including changes to the mechanism and rates of relief, and a major uptick in the rate of HMRC enquiry into claims.
One of the arguably simpler changes in principle has been one that’s tripping up the most businesses – the (potential) requirement to pre-notify HMRC of your intention to claim R&D tax relief.
In practice the exercise is straight forward, requiring a brief project summary and some basic administrative information, which is required within 6 months of the company’s financial year end. Broadly speaking, the pre-notification is required if a company has not claimed before, or has not made a claim in the last 3 years or so.
A proportion of Fintech companies have already claims under R&D tax incentives regime in recent years so many have disregarded the above requirement, however the devil is in the detail.
In order for a claim to ‘count’ within the last years, the claimant company must have submitted their R&D claim through their original tax submission.
In other words, if a company files their tax return and later submits their R&D claim through an amended return, this might not ‘count’ as a claim for the purpose of the pre-notification rules (depending on the date of the relevant submission), and therefore pre-notification could still be required within 6 months of the financial year end. If missed, this would cause a company to lose out on the ability to claim for an entire year of activities and associated costs.
Our partners at Sedulo specialises in financial technology R&D claims and their team has spoken with many companies recently who have unknowingly fallen short of this rule that is seemingly simple but in reality rather complicated. So complicated in fact that HMRC themselves struggled to explain the rule on a webinar for R&D advisers when it was becoming applicable to some claimants in September 2024!
With December and March being the most common financial year ends for companies in the UK, we want to ensure that our network is up to speed with this rule change (and others) so that they can take action, where needed, by June and September 2025 respectively.
Speak to an expert
If you’d like to ensure that you’ve got this covered then we would recommend speaking to George Stuffins, Senior Business Development Manager at Sedulo, who you can contact via email at george.stuffins@sedulo.co.uk.
Sedulo are a leading independent, mid-tier accountancy and advisory firm who support businesses in areas such as tax incentives, tax advisory, funding, and audit. They are home to some of the UK’s leading R&D tax consultants and technology experts with invaluable experience supporting major retail banks with their complex R&D tax claims.
